Govt delinks licences from spectrum

New telecom policy: For extra spectrum,operators will have to pay market price.

Written by ENS Economic Bureau | New Delhi | Published: January 30, 2011 1:58 am

To put its house in order following the scandal over allocation of 2G spectrum in 2008,the Government today announced that in future,no licence will be issued bundled with spectrum. Moreover,operators will have to pay market price for additional spectrum.

Announcing the broad contours of the new policy being framed by the Department of Telecommunication,Communications and IT Minister Kapil Sibal said if the licences of new operators are held valid,they will have to pay a market price for the additional 1.8 Mhz of 2G spectrum. Currently,old operators who got licences in 2001 are entitled to have 6.2 Mhz of spectrum while new operators are eligible for 4.4 Mhz.

Following the announcement today,new operators will have to pay market price for additional spectrum while old operators like Airtel and Vodafone,who hold spectrum beyond 6.2 Mhz,will have to pay market-driven prices for additional airwaves.

For new operators,the contracted amount of spectrum would be 4.4 Mhz and for incumbent players like Bharti and Idea,the limit would be 6.2 Mhz,Sibal added.

“The old telecom policy during the NDA regime… over years we have reached a stage where the objective of the policy has been served… So,in future,the spectrum will not be bundled with licence. The licence to be issued to telecom operators will be in the nature of ‘Unified Licence’ and the licence holder will be free to offer any of the multifarious telecom services. In the event,the licence holder would like to offer wireless services,it will have to obtain spectrum through a market-driven process,” Sibal said.

The announcement is expected to make operations unviable for new operators compared to incumbent players.

According to the National Telecom Policy 1999,spectrum was allotted bundled with licence and on first-come first-served basis.

The announcement is part of the 100-day agenda flagged by the Minister early this month in the backdrop of the row over the allocation of 2G spectrum in 2008 at 2001 prices.

Sibal said that in the event of licences getting cancelled,“the dispensation would be under the new policy… if some licences are held valid,then the extra spectrum would be given under the new policy”.

It is to be noted that showcause notice has been issued to certain licencees for cancellation who suppressed facts while securing licences and airwaves for second generation telecom services in the country between 2006 and 2008.

The changes,which would be implemented with immediate effect,would ensure greater transparency,Sibal said. “We need to seriously consider the adoption of an auction process for allocation and pricing of spectrum beyond 6.2 Mhz while ensuring that there is adequate competition in the auction process,” he said.

On revenue sharing,there would be a uniform rate that will be paid by operators as spectrum charge to the Government so that “a level playing field for all players is there”.

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